OnTheMarket (OTM) and CoStar Group have this morning announced an agreement on the terms of a recommended cash offer for OnTheMarket, presenting a transformational opportunity for OTM to become the number one property portal in the UK.
The offer of 110p per share represents a premium of 56.0% to OTM’s last closing price and 93.2% to the three-month volume weighted average price. The deal was unanimously recommended by the OnTheMarket Board while CoStar have also received irrevocable undertakings and letters of intent with respect to approximately 29.5% of OnTheMarket shares including OnTheMarket’s six largest shareholders including Spicerhaart.
CoStar says it remains committed to OTM position as ‘the agents’ portal’ with fair and sustainable
pricing.
Accelerating OTM’s strategy to become the UK market leader, CoStar Group has, as part of their offer, stated their intention to:
+ Spend £46.5m on sales and marketing in the first full year following the commencement of the integration, as the first stage of a multi-year investment programme totalling hundreds of millions of pounds to drive more consumers to the OnTheMarket portal. This is six times what OnTheMarket currently spends and more than three times the current annual media spend of Rightmove.
+ Strengthen OTM’s position as ‘the agents’ portal’ by continuing to charge agents a small proportion of what Rightmove currently charges
+ The OTM directors believe that CoStar’s expertise will also provide growth opportunities to develop the the portal agent and consumer offer through additional products, services and functionality.
Jason Tebb, CEO of OTM, said: “From a position of strength, partnering with CoStar Group will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing.
CoStar Group will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector. We have strong shared values in our commitment to agents who we believe will benefit from unparalleled value and greater opportunities to enhance their businesses.”
Andy Florance, founder and chief executive officer of CoStar Group, commented: “We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar Group into the estimated £8 trillion UK residential property market. We are excited to welcome the OnTheMarket team to the CoStar Group family.
“We are excited to combine CoStar Group’s resources and leading marketplace experience with OnTheMarket’s agent-focused culture to create a leading player in the UK marketplace and provide increased choice and higher quality offerings for consumers.”
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